`
`
`
`
`Case No. IPR2014-00177
`
`
`
`Paper No.
`Filed: March 6, 2014
`
`
`Filed on behalf of: VirnetX Inc.
`By:
`Joseph E. Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow,
` Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Telephone: 571-203-2700
`Facsimile: 202-408-4400
`E-mail: joseph.palys@finnegan.com
`
` naveen.modi@finnegan.com
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`RPX CORPORATION
`Petitioner
`v.
`VIRNETX INC.
`Patent Owner
`
`
`
`Case IPR2014-00177
`Patent 7,418,504
`
`
`
`
`
`Patent Owner’s Preliminary Response
`to Petition for Inter Partes Review
`of U.S. Patent No. 7,418,504
`
`
`
`
`
`
`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`Case No. IPR2014-00177
`
`Table of Contents
`
`I.
`
`II.
`
`Introduction ...................................................................................................... 1
`
`The Petition Fails to Meet the Requirements for Instituting an
`Inter Parfes Review ......................................................................................... 2
`
`A.
`
`The Petition Should Not Be Considered Under 35 U.S.C.
`
`§§ 312(a)(2) and 315(b) ........................................................................ 3
`
`1.
`
`
`
`b)
`
`RPX and Apple Have Tried to Hide Apple’s
`Involvement ...................................................................... 6
`
`2.
`
`The Petition Fails to Name a Real Party—in-Interest ................... 8
`
`a)—...............9
`
`b)— ........ w
`
`c)
`
`d)
`
`RPX and Apple Violated the Third Guan Factor ........... 11
`
`RPX Is Like the Requester in Guan ............................... 12
`
`3.
`
`Trial May Not Be Instituted Under 35 U.S.C. § 315(b) ........... 14
`
`a)
`
`b)
`
`Apple Is a Time-Barred Real Party-in-Interest .............. 14
`
`Apple Is a Time-Barred Privy ........................................ 14
`
`4.
`
`Policy Considerations Support Denying the Petition ............... 17
`
`The Petition Fails to Comply with 35 U.S.C. § 312(a)(3) and
`37 C .F.R. § 42.104(b)(4) ..................................................................... 18
`
`Claims 2, 5, and 27 Were Improperly Challenged for the First
`Time in the “Corrected Petition” ......................................................... 22
`
`RPX’s Petition Should Be Denied Under 35 U.S.C. § 325(d) ............ 23
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`E.
`
`The Board Should Not Institute Based on the Petition’s
`Redundant Grounds .............................................................................25
`III. The Petition’s Claim Constructions Are Flawed and Should Be
`Rejected .........................................................................................................31
`A. Overview of the ’504 Patent ................................................................32
`B.
`Level of Ordinary Skill in the Art .......................................................35
`C.
`“Domain Name” (Claims 1, 2, 7, 8, 15-18, 20-21, 24-26, 35-37,
`39-40, 42, 44-45, 48-50, and 59-60) ...................................................36
`“Top-Level Domain Name” (Claims 2-4 and 37) ...............................38
`“Domain Name Service System” (Claims 1, 5, 7-8, 14-17, 19-
`24, 27, 33, 35, 36, 41, 48, 51, 57, 59, and 60) .....................................39
`“Secure Communication Link” (Claims 1, 9, 10, 16-18, 22, 24,
`26-29, 33, 35, 36, 40-42, 46, 48, 50-53, 57, 59, and 60) .....................42
`The “Indication” Phrases (Claims 1, 17, 24, 36, 41, 48, and 60) ........46
`G.
`“Transparently” (Claims 27 and 51) ...................................................48
`H.
`“Secure Name” (Claims 25 and 49) ....................................................49
`I.
`If Trial Is Instituted, VirnetX Requests an 18-Month Schedule ...................52
`Conclusion .....................................................................................................53
`
`
`
`D.
`E.
`
`F.
`
`IV.
`V.
`
`ii
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Federal Cases
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348 (June 12, 2013) Paper No. 1 ....................................................... 4
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00393 (Oct. 4, 2013) Paper No. 13 ..................................................... 30
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00394 (Oct. 4, 2013) Paper No. 11 ..................................................... 20
`Asahi Glass Co. v. Toledo Eng’g Co.,
`505 F. Supp. 2d 423 (N.D. Ohio 2007) .............................................................. 16
`Aspex Eyewear, Inc. v. Marchon Eyewear, Inc.,
`672 F.3d 1335 (Fed. Cir. 2012) .......................................................................... 49
`In re Bigio,
`381 F.3d 1320 (Fed. Cir. 2004) .......................................................................... 44
`EMC Corp. v. Personal Web Techs., LLC,
`IPR2013-00087 (June 5, 2013) Paper No. 25 ..................................................... 26
`Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC,
`IPR2012-00001 (Jan. 9, 2013) Paper No. 15 ................................................ 32, 44
`Gustafson v. Alloyd Co., Inc.,
`513 U.S. 561 (1995) ............................................................................................ 15
`Idle Free Sys., Inc. v. Bergstrom, Inc.,
`IPR2012-00027 (June 11, 2013) Paper No. 26 ................................................... 26
`In re Guan et al. Inter Partes Reexamination Proceeding, Control No.
`95/001,045, Decision Vacating Filing Date (Aug. 25, 2008) ......................passim
`Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd.,
`IPR2013-00324 (Nov. 21, 2013) Paper No. 19 ................................................. 24
`LaRose Indus., LLC v. Capriola Corp.,
`IPR2013-00120 (July 22, 2013) Paper No. 20 ............................................. 26, 30
`
`iii
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co.,
`CBM2012-00003 (Oct. 25, 2012) Paper No. 7 ................................. 25, 26, 27, 30
`Motorola Solutions, Inc. v. Mobile Scanning Techs., LLC,
`IPR2013-00093 (Apr. 29, 2013) Paper No. 28 ............................................. 32, 45
`Phelps v. Hamilton,
`122 F.3d 1309 (10th Cir. 1997) .......................................................................... 16
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) (en banc) .......................................................... 31
`SAP Am., Inc. v. Versata Dev. Group, Inc.,
`CBM2012-00001 (June 11, 2013) Paper No. 70 ................................................ 38
`SAP Am., Inc. v. Pi-Net Int’l, Inc.,
`CBM2013-00013 (Sept. 19, 2013) Paper No. 15 ............................................... 15
`ScentAir Techs., Inc. v. Prolitec, Inc., Case
`IPR2013-00180 (Aug. 26, 2013) Paper No. 18 .................................................. 27
`Tasco, Inc. v. Pagnani,
`IPR2013-00103 (May 23, 2013) Paper No. 6 ..................................................... 19
`Taylor v. Sturgell,
`553 U.S. 880 (2008) ............................................................................................ 17
`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054 (July 13, 2013) Paper No. 16 ................................................... 19
`Xilinx, Inc. v. Intellectual Ventures I LLC,
`IPR2013-00112 (June 27, 2013) Paper No. 14 ................................................... 45
`In re Zletz,
`893 F.2d 319 (Fed. Cir. 1989) ............................................................................ 31
`ZTE Corp. & ZTE (USA) Inc. v. ContentGuard Holdings Inc.,
`IPR2013-00134 (June 19, 2013) Paper No. 12 ................................................... 45
`State Cases
`Arpadi et al. v. First MSP Corp. et al.,
`68 Ohio St. 3d 453 (Sept. 21, 1993) ................................................................... 16
`
`iv
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`Federal Statutes
`35 U.S.C. § 311 .......................................................................................................... 8
`35 U.S.C. § 312(a) ................................................................................................. 1, 2
`35 U.S.C. § 312(a)(2) ................................................................................. 3, 8, 14, 53
`35 U.S.C. § 312(a)(3) ................................................................................. 1, 2, 18, 22
`35 U.S.C. § 313 .......................................................................................................... 1
`35 U.S.C. § 314(a) ................................................................................................... 18
`35 U.S.C. § 315 ........................................................................................................ 14
`35 U.S.C. § 315(b) ............................................................................................passim
`35 U.S.C. § 315(e) ................................................................................................... 18
`35 U.S.C. § 316(a)(1) ............................................................................................... 52
`35 U.S.C. § 325(d) ............................................................................................passim
`Rules
`Fed. R. Civ. P. 17(a)................................................................................................. 18
`Regulations
`37 C.F.R. § 42.5(c)(3) .............................................................................................. 23
`37 C.F.R. § 42.8 ....................................................................................................... 52
`37 C.F.R. § 42.100(b) .............................................................................................. 31
`37 C.F.R. § 42.100(c) ............................................................................................... 52
`37 C.F.R. § 42.104(b)(4) ............................................................................ 1, 2, 18, 22
`37 C.F.R. § 42.107 ..................................................................................................... 1
`
`v
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`Other Authorities
`77 Fed. Reg. 48680, Changes to Implement Inter Partes Review
`Proceedings (Aug. 14, 2012) .............................................................................. 23
`77 Fed. Reg. 48756, Office Patent Trial Practice Guide
`(Aug. 14, 2012) ............................................................................................passim
`157 Cong. Rec. S1041-42 (daily ed. Mar. 1, 2011) ................................................. 24
`
`
`
`
`
`vi
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`I.
`
`Introduction
`Patent Owner VirnetX Inc. respectfully submits this Preliminary Response
`
`in accordance with 35 U.S.C. § 313 and 37 C.F.R. § 42.107, responding to the
`
`Corrected Petition for Inter Partes Review (the “Petition”) filed by RPX
`
`Corporation. VirnetX requests that the Board not institute inter partes review for
`
`several reasons.
`
`First,
`
`
`
` including the petition in this inter partes review. Apple is
`
`time-barred from challenging VirnetX’s U.S. Patent No. 7,418,504 (“the ’504
`
`patent”) under 35 U.S.C. § 315(b), and
`
`
`
` Apple is a real party-in-interest in this proceeding, and Apple
`
`and RPX are privies. Thus, the case should be dismissed under 35 U.S.C.
`
`§§ 312(a) and 315(b).
`
`Second, the Petition fails to comply with several rules and regulations
`
`regarding the content of petitions. The Petition either never or rarely cites the
`
`asserted prior art references, violating the particularity requirements of 35 U.S.C.
`
`§ 312(a)(3) and 37 C.F.R. § 42.104(b)(4). It also attempts to add new challenged
`
`claims not identified in the original petition under the guise of a “Corrected
`
`Petition.” The Petition also proposes horizontally and vertically redundant grounds
`
`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`without identifying how any one ground improves on any other, violating Board
`
`precedent requiring petitioners to identify differences in the proposed rejections.
`
`Third, the proposed rejections here are duplicative of the proposed rejections
`
`in copending reexamination of the ’504 patent, which rely on many of the same
`
`references and rejections proposed by RPX. The Board should decline to institute
`
`this duplicative proceeding under 35 U.S.C. § 325(d).
`
`Finally, RPX proposes a series of incorrect claim constructions. Because its
`
`unpatentability challenges are premised on incorrect claim constructions, RPX has
`
`not met its burden of demonstrating a reasonable likelihood of prevailing in
`
`proving unpatentability of any ’504 patent claim.
`
`II. The Petition Fails to Meet the Requirements for Instituting an
`Inter Partes Review
`Trial should not be instituted because RPX’s Petition does not comply with
`
`numerous statutes and regulations that must be satisfied for institution. Violations
`
`include:
`
`(1) not identifying all real parties in interest under 35 U.S.C. § 312(a);
`
`(2) being barred under 35 U.S.C. § 315(b) because a real party in interest or
`
`privy of RPX was served with a complaint alleging infringement of the ’504 patent
`
`more than one year before the Petition was filed;
`
`(3) failing to comply with 35 U.S.C. § 312(a)(3)’s particularity requirement
`
`and 37 C.F.R. § 42.104(b)(4)’s requirement to “specify where each element of the
`
`2
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`Case No. IPR2014-00 177
`
`claim is found in the prior art patents or printed publications relied upon” by citing
`
`almost solely to expert declarations, which often generalize the references, as
`
`opposed to citing the references themselves;
`
`(4) attempting to add new challenged claims not identified in the original
`
`petition under the guise of a “Corrected Petition”;
`
`(5) relying on references already at issue in other proceedings, resulting in
`
`cumulative proceedings that warrant dismissing this Petition under 35 U.S.C.
`
`§ 325(d); and
`
`(6) proposing redundant grounds without identifying how any one ground
`
`improves on any other.
`
`A.
`
`The Petition Should Not Be Considered Under 35 U.S.C.
`
`§§ 312(a)(2) and 315(b)
`
`The Petition fails to identify at least Apple as a real party-in-interest (“RPI”),
`
`as required by 35 U.S.C. § 312(a)(2), and is barred under § 315(b) because Apple
`
`is RPX’s privy and is time-barred from challenging the ’504 patent. Several policy
`
`considerations also support denial of the Petition.
`
`a)—
`
`RPX is a defensive patent services provider that, by its own admission,
`
`“serves as an extension of a client’s in-house legal team,” acts as a “trusted
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`intermediary” for its clients, and “selectively clear[s its] clients” from litigation.
`
`(Exs. 2006, 2007 at 3, 2008.) To fund these services, RPX receives yearly
`
`subscription fees from clients
`
`
`
`
`
`
`
`
`
`
`
`
`
` Following a series of
`
`setbacks against VirnetX, however, Apple reversed course.
`
`After a district court ordered Apple to pay VirnetX approximately $368M in
`
`damages, (Ex. 2009), Apple filed a series of IPR petitions against VirnetX’s
`
`patents. (See, e.g., Apple Inc. v. VirnetX Inc., IPR2013-00348, Paper No. 1 (June
`
`12, 2013).) But in an August 5, 2013, Board call, it became clear that Apple’s IPR
`
`petitions would likely be found time-barred under 35 U.S.C. § 315(b), and the
`
`discussion turned to whether Apple could properly seek joinder with a series of
`
`IPR petitions filed by New Bay Capital. (Ex. 2038 at 3-5.) Seeing its chance to
`
`challenge VirnetX’s patents in inter partes review slipping away,
`
`
`
`
`
`4
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`On October 18, New Bay informed the Board of its intent to terminate its
`
`IPR proceedings, ending Apple’s hopes of joining New Bay’s petitions
`
` (Ex. 2039; Exs. 2041-44.)
`
`
`
`
`
`
`
`
`
`
`
` And within days, Apple, through its attorneys at Sidley
`
`Austin, formally objected to terminating New Bay’s IPR petitions. (Ex. 2040.)
`
`RPX, in turn,
`
` retained Apple’s same team of Sidley Austin
`
`attorneys who filed Apple’s IPR petitions.
`
`
`
`5
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`
`
`
`
`
`
`RPX—represented by Apple’s counsel at Sidley Austin (Ex. 1084 at 13:12-18:11,
`
`Ex. 2001 at 71:11-22)—filed this Petition and six others, raising grounds
`
`“substantially identical” or “substantially similar” to those raised by Apple.1 (See
`
`e.g., Pet. at 6;
`
`
`
`b) RPX and Apple Have Tried to Hide Apple’s
`Involvement
`
`
`
`
`
` Apple and RPX have attempted to give the
`
`impression throughout this proceeding that they are unconnected entities and that
`
`Apple is not an RPI or a privy of RPX. For instance, neither party disclosed
`
`RPX’s relationship with Apple’s counsel—even when asked directly by the Board
`
`whether Apple’s counsel aided RPX in preparing its petitions. (Ex. 2001 at 69:6-
`
`71:4.) RPX and Apple only admitted that they shared counsel after VirnetX
`
`
`1 While the petitions are similar, there are differences as well. For instance,
`
`RPX’s petitions respond to certain arguments made by VirnetX in its preliminary
`
`responses in the earlier Apple cases.
`
`6
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`disclosed the existence of metadata within RPX’s petitions revealing Sidley
`
`Austin’s involvement. (Ex. 2001 at 71:11-22.) Even then, RPX and Apple limited
`
`their disclosure to select facts.
`
`
`
`Similarly, in opposing VirnetX’s motion for additional discovery, Apple and
`
`RPX continued to assert that there were no communications between Apple and
`
`RPX regarding the RPX petitions. (See, e.g., Paper No. 24 at 2.)
`
`
`
` Likewise,
`
`just three days ago, Apple represented to the Board that no pre-filing
`
`communications exist between Sidley Austin and Apple regarding the RPX IPRs.
`
`(Ex. 2059 at 27:6-28:8; 29:19-30:8.)
`
`
`
`7
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`
`
`
`
`Apple and RPX continue to provide only select information regarding
`
`communications between them.
`
`
`
`Nevertheless, as discussed below, the facts still reveal that Apple is an unnamed
`
`RPI and a time-barred privy of RPX.
`
`The Petition Fails to Name a Real Party-in-Interest
`2.
`35 U.S.C. § 312(a)(2) states that “[a] petition filed under section 311 may be
`
`considered only if . . . the petition identifies all real parties in interest.” 35 U.S.C.
`
`§ 312(a)(2). Because this Petition fails to do so, it must be denied.
`
`The “‘real party-in-interest’ is the party that desires review of the patent.”
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48759 (hereinafter, “TPG”).
`
`While this may include the petitioner itself, it also includes “the party or parties at
`
`whose behest the petition has been filed.” Id. The TPG instructs that generally, “a
`
`party that funds and directs and controls an IPR . . . petition or proceeding
`
`constitutes a ‘real party-in-interest.” Id. at 48760. While actual control or having
`
`the “opportunity to control” are two ways to establish that a party is an RPI, these
`
`are not the only ways. See id. RPI determinations are handled on a “case-by-case
`
`basis” and should involve a “deeper consideration of the facts.” Id.
`
`8
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`In re Guan, which the TPG approvingly cites as providing “additional
`
`guidance” on RPI issues (id. at 48759), identifies, among other things, three
`
`prohibitions that, if any one is violated, results in a party being an RPI:
`
`[A party] cannot do any of the following and not identify
`the other entity as real party in interest:
`
`1). Accept payment from another group, pay the
`requester
`to
`file
`the
`request
`for
`inter partes
`reexamination . . . .
`
`2). Obtain money for foundation grants, file a “quid pro
`quo” request for an inter partes reexamination where the
`foundation wants reexamination on a specific patent the
`foundation deems anti-competitive . . . .
`
`3). Allow another entity to direct or control the content,
`(e.g., provide the prior patents/printed publications on
`which the reexam is to be based) of the request . . . .
`
`In re Guan et al. Inter Partes Reexamination Proceeding, Control No. 95/001,045,
`
`Decision Vacating Filing Date at 8 (Aug. 25, 2008) (emphasis added). While
`
`violating any one of the three Guan prohibitions requires finding that Apple is an
`
`RPI,
`
`
`
`
`
`9
`
`
`
`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`
`
`
`
`
`
`
`
`
`
`While RPX states
`
` it is “solely
`
`responsible for payment of any expenses of preparing and filing petitions” (Pet. at
`
`3;
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`10
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`RPX and Apple Violated the Third Guan Factor
`c)
`RPX and Apple also violated Guan’s third prohibition—“[a]llow[ing]
`
`another entity to direct or control the content, (e.g., provid[ing] the prior
`
`patents/printed publications on which the reexam is to be based) of the request.”
`
`Guan at 8. Guan expands on what it means to direct or control content by
`
`explaining that boilerplate statements by a requester that it “controlled the content”
`
`of a request fail to satisfy the RPI inquiry where there is ambiguity. Id. at 2, 5, 8.
`
`Looking to the requester’s actions, the Office determined that if the requester
`
`received the “prior patents/printed publications on which the reexam is to be
`
`based” from another party or allowed that party to conduct a “technical review,”
`
`11
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`even if only to ensure accuracy, the other party has directed and controlled the
`
`filing to such an extent that it must be named as an RPI. Id. at 2, 8. Guan also
`
`explains that an entity cannot be named as the sole real party in interest if it
`
`receives funding and even a “suggestion” from another party that a particular
`
`patent should be challenged. Id. at 7-8.
`
`
`
`
`
` RPX received
`
`Apple’s prior art, Apple’s experts, and the patents and claims to be reviewed. (Id.)
`
`And Apple’s team of attorneys at Sidley Austin helped review, prepare, and file
`
`RPX’s IPR petitions. (Id.)
`
` Thus, under the third Guan factor, Apple is an RPI.
`
`d) RPX Is Like the Requester in Guan
`
`
`
`
`
`
`
`
`
`
`
` In
`
`Guan, the Office said the requester provides “freedom to operate services” and
`
`“undertake[s] ‘projects’ to file reexaminations to open up market competition and
`
`12
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`broaden competition.” Guan at 2. RPX similarly states that it “is the leading
`
`provider of patent risk solutions”
`
`
`
` (Pet. at 2;
`
`; see also Exs. 2006-2008,
`
`describing RPX’s business model). As a company that makes no products and has
`
`no risk itself regarding VirnetX’s patents, RPX had no incentive to file these IPR
`
`petitions
`
`
`
`
`
`, RPX quickly filed IPR petitions on the same
`
`patents as Apple’s time-barred petitions (see generally, Pet.).
`
`As the Office noted, entities like the Guan requester and RPX cannot be
`
`used to “act as a ‘shill’ in an inter partes [review petition] to shield the identity of
`
`the real party or parties in interest” and/or to circumvent estoppel provisions.
`
`Guan at 7. Consistent with this view, the TPG identifies the “nature of the entity
`
`filing the petition” as a “relevant factor” in assessing RPI issues. TPG at 48760.
`
`
`
`
`
` Indeed, RPX
`
`“serves as an extension of a client’s in-house legal team” (Ex. 2006) and is no
`
`different than a law firm that is retained to prepare and file IPR petitions. An
`
`entity,
`
` would not be able to hide behind a law firm, and it should
`
`13
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`not be allowed to hide behind
`
` Accordingly, RPX’s Petition should be denied
`
`under 35 U.S.C. § 312(a)(2) for failing to name all real parties-in-interest.
`
`Trial May Not Be Instituted Under 35 U.S.C. § 315(b)
`3.
`Under 35 U.S.C. § 315 “[a]n inter partes review may not be instituted if the
`
`petition requesting the proceeding is filed more than 1 year after the date on which
`
`the petitioner, real party in interest, or privy of the petitioner is served with a
`
`complaint alleging infringement of the patent.” 35 U.S.C. § 315(b) (emphasis
`
`added). Because the Board previously found that Apple was time-barred from
`
`challenging the ’504 patent in inter partes review, § 315(b) also bars this Petition.
`
`Apple Is a Time-Barred Real Party-in-Interest
`a)
`On April 5, 2011, VirnetX served a complaint against Apple, alleging
`
`infringement of the ’504 patent. (Ex. 2037.) Over two years later, Apple filed a
`
`series of IPR petitions challenging a number of VirnetX patents, including the ’504
`
`patent. These were denied by the Office as time-barred under § 315(b). (See, e.g.,
`
`Exs. 2010-2016.) Because Apple is an RPI, as discussed above, RPX’s Petition
`
`must also be denied.
`
`b) Apple Is a Time-Barred Privy
`In comparison to RPIs, “[t]he notion of ‘privity’ is more expansive,
`
`encompassing parties that do not necessarily need to be identified in the petition as
`
`a ‘real party-in-interest.’” TPG at 48759. A privity analysis ultimately “seeks to
`
`determine whether the relationship between the purported ‘privy’ and the relevant
`
`14
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`other party is sufficiently close such that both should be bound by the trial outcome
`
`and related estoppels.” Id.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`In addition to its own decisions, the Office will apply “federal caselaw” and
`
`“traditional common-law principles” of privity. TPG at 48759. Federal courts
`
`2 Although this decision claims to be limited to covered business method
`
`reviews (CBMs), the America Invents Act does not define privity any differently
`
`for CBMs than it does for IPRs. Because Congress used the same language in the
`
`CBM and IPR statutes, the same analytical framework applies in both types of
`
`proceedings. See Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 570 (1995) (stating
`
`that the “normal rule of statutory construction” is that “identical words used in
`
`different parts of the same act are intended to have the same meaning.”).
`
`15
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`have found that “the existence of shared counsel supports a finding of privity
`
`where other factors present suggest that a unique relationship exists between the
`
`two parties.” Asahi Glass Co. v. Toledo Eng’g Co., 505 F. Supp. 2d 423, 436
`
`(N.D. Ohio 2007). As one appellate court put it: “control need not be exercised
`
`directly by the non-litigating party. It is sufficient that the choices were in the
`
`hands of counsel responsible to the controlling person; moreover, the requisite
`
`opportunity may exist even when it is shared with other persons.” Phelps v.
`
`Hamilton, 122 F.3d 1309, 1319 (10th Cir. 1997) (internal quotations omitted).
`
`In this inter partes review, the same Sidley Austin attorneys who
`
`represented Apple in its time-barred IPRs also represented RPX in preparing and
`
`filing this IPR Petition. Those attorneys were able to safeguard Apple’s interests,
`
`and “the choices [regarding the RPX IPR petitions] were in the hands of counsel
`
`responsible to the controlling person [Apple].” Id. Thus, under these unique
`
`circumstances, RPX’s and Apple’s sharing of counsel demonstrates that they are
`
`privies for purposes of this inter partes review under federal caselaw.
`
`In addition,
`
`
`
`
`
` Courts have held that “those persons to whom a
`
`fiduciary duty is owed are in privity with the fiduciary.” Arpadi et al. v. First MSP
`
`16
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`Corp. et al., 68 Ohio St. 3d 453, 458 (Sept. 21, 1993).
`
`
`
`
`
`
`
` which the U.S. Supreme Court has said will establish privity.
`
`Taylor v. Sturgell, 553 U.S. 880, 893-95 (2008). Accordingly, “preclusion is
`
`appropriate,” see id., and the Board should dismiss the Petition as being time-
`
`barred under § 315(b).
`
`Policy Considerations Support Denying the Petition
`4.
`The Office identifies two primary purposes of the RPI and privity
`
`requirements: (1) assisting the Board in identifying its own internal conflicts of
`
`interest; and (2) ensuring proper application of statutory estoppel provisions within
`
`the Office. TPG 48759.
`
`
`
`
`
`
`
`
`
`First, if a petition names only a nominal party and not the true RPI(s), the
`
`Board cannot ensure the proceeding is handled ethically. For instance, it would be
`
`impossible to assure that the panel assigned to the proceeding is free of conflicts
`
`with the underlying parties and that appropriate ethical walls have been erected
`
`between USPTO personnel. Naming all RPIs is critical to achieving this.
`
`17
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`Second, proper application of statutory estoppel provisions allows the Office
`
`“[1] to protect patent owners from harassment via successive petitions by the same
`
`or related parties, [2] to prevent parties from having a ‘second bite at the apple,’
`
`and [3] to protect the integrity of both the USPTO and Federal Courts by assuring
`
`that all issues are promptly raised and vetted.” Id. (citing Fed. R. Civ. P. 17(a)
`
`Advisory Committee Note).
`
`
`
`
`
`
`
` The Board should not endorse this
`
`approach. The Petition should be denied for at least these reasons.
`
`Alternatively, if the Board does not want to decide the RPI and privity issues
`
`here, it can exercise its discretion to deny the Petition, especially in light of the
`
`pending inter partes reexaminations. See 35 U.S.C. §§ 314(a), 325(d).
`
`B.
`
`The Petition Fails to Comply with 35 U.S.C. § 312(a)(3) and
`37 C.F.R. § 42.104(b)(4)
`A petition must identify “in writing and with particularity, each claim
`
`challenged, the grounds on which the challenge to each claim is based, and the
`
`evidence that supports the grounds for the challenge to each claim[.]” 35 U.S.C.
`
`§ 312(a)(3). It must also “specify where each element of the claim is found in the
`
`prior art patents or printed publications relied upon.” 37 C.F.R. § 42.104(b)(4).
`
`18
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`The “failure to point out where each element is found in the prior art is a
`
`deficiency in the substantive requirements of the petition,” which results in denial
`
`of the petition. Wowza Media Sys., LLC et al. v. Adobe Sys., Inc., IPR2013-00054,
`
`Paper No. 16 at 3 (July 13, 2013). Accordingly, the Board has denied petitions for
`
`failure to cite prior art references being asserted. See, e.g., Tasco, Inc. v. Pagnani,
`
`IPR2013-00103, Paper No. 6 at 22 (May 23, 2013) (“Rather than providing
`
`citations to supporting evidence in [a prior art reference] Petitioner provides
`
`conclusory statements, such as ‘[s]ince each circuit of the circuit breaker receives a
`
`signal from a distinct transmitter, the signals of all the circuits must be different or
`
`unique.’ (Pet. at 42 (no citation to [prior art reference] provided).”)
`
`RPX’s Petition fails to meet these requirements because the Petition cites
`
`almost exclusively to an accompanying declaration (Ex. 1003) rather than to the
`
`prior art references themselves. The result is that, for many claim features, it is
`
`unclear what feature in the prior art the Petition is attempting to refer to through
`
`the declarations. Because of this flaw, the Board and VirnetX are forced to cobble
`
`19
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Case No. IPR2014-00177
`
`together and, in some instances, to simply speculate about what specific invalidity
`
`theories are being asserted.3
`
`For example, the Petition asserts that Beser anticipates claims 1-3, 5, 15-18,
`
`20-27,4 31-32, 35-36, 47, 51, and 60, but the Petition fails to actually cite Beser
`
`itself at all. (Pet. at 18-33.) Similarly, the Petition asserts that Kiuchu anticipates
`
`claims 1-3, 5, 15-18, 20-27, 31-32, 35-36, 47, 51, and 60, but cites Kiuchi only for
`
`portions of the challenged claims, never for all features of any challenged claim.
`
`(Id. at 37-53.) The Petition also fails to cite the asserted RFC 2401 reference at all.
`
`(